UPDATE 1-Indian court refuses to lift deadline for Kotak Mahindra stake dilution - TV

(Adds shares, background)

MUMBAI, Dec 17 (Reuters) - An Indian court refused to stay the central bank order forcing Kotak Mahindra Bank Chief Executive Uday Kotak to dilute his stake in the company he founded, news channel CNBC TV18 reported on Monday, sending shares of the lender sliding nearly 4 percent.

The bank last week challenged the Reserve Bank of India’s (RBI) decision to not recognise its issuance of preference shares as a means of effectively meeting the objective of the RBI order.

The central bank order mandated Uday Kotak to lower his holding in the bank to 20 percent by the end of the year.

Uday Kotak was also ordered by the RBI to further reduce his stake to 15 percent by March 31, 2020. He directly held a 29.73 percent stake in the bank as of Sept. 30, according to exchange data.

Kotak Mahindra Bank in August issued perpetual non-convertible preference shares (PNCPS) in a bid to comply with the promoter stake rules of the RBI, but was told by the central bank that this plan did not meet official requirements.

The Bombay High Court ruling means Uday Kotak will now have to bring down his stake before the Dec. 31 deadline, or be barred from opening any new branches for a period of two years.

Earlier this month, local media reported that billionaire global investor Warren Buffett’s Berkshire Hathaway Inc was looking to buy a 10 percent stake in Kotak Mahindra Bank.

The bank had said at the time that it was unaware of any such development.

Shares of Kotak Mahindra Bank were down 3.4 percent at 1,213.50 rupees by 0855 GMT in Mumbai. (Reporting by Swati Bhat; Editing by Gopakumar Warrier)